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The housing market is starting to crack – Sellers are cutting prices

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Re: The housing market is starting to crack – Sellers are cutting prices

#121

Post by eweise »

deathanatos wrote: post #82
eweise wrote: post #56

Earlier quoted context omitted.

California homeowners pay property tax and the rate goes up either with inflation or 2%. I'm guessing you think it should go up with the market value of the home. Thank god it doesn't or I would have had to sell instead of being able to give my kids a stable home for the past 18 years.

You're obtusely ignoring the commenter's point, and I suspect you know it. You've got the mechanics a bit wrong, but the point is that your property tax, in real dollars, goes down YoY, as it cannot do anything but that due to Prop 13. In particular, it cannot even track the real dollar (let alone increase). This is a well-known issue and underlying cause of a number of CA's political problems, biggest of which being…

Until the recently the inflation rate was really low so my property tax did track the real dollar. In fact my house lost value for the first three years.

The problem with prop 13 is that it also covers commercial property. This is a serious loss to our tax base with no good reason.

easy loans plus not enough building are the reason can't afford a home, not prop 13. The average length of homeownership in CA is less than five years. They turn over.

Re: The housing market is starting to crack – Sellers are cutting prices

#122

Post by throwaway14356 »

glimshe wrote: post #26

Surprise, surprise. The historical housing bubble was caused by artificially low interest rates adopted worldwide. Ever-increasing housing prices is bad for people who own homes (higher property taxes, property tax distortions across cities, higher fees when changing houses) and those who don't own any. Low interest rates discourage saving and encourage unproductive speculation and house flipping. The people benefitt…

Lower salaries would do the trick too!

Jokes aside, I would like a list of reasons why people could own homes build out of grunt work 100 years ago but cant today with all the truly marvelous technology.

Besides choking in the red tape stuff like: wood is expensive if you don't plant trees. Long ago people planted the trees (where the house was to be build) when the baby was born.

Re: The housing market is starting to crack – Sellers are cutting prices

#123

Post by spaceflunky »

jeffreyrogers wrote: post #120
spaceflunky wrote: post #115

Earlier quoted context omitted.

>Unless the housing supply increases this will just be a temporary thing. The housing supply will increase dramatically in the next decade, not by building but by attrition. More than 55% of all homes in America are owned by Silent Gens or Boomers[0]. That figure includes non-SFHs, of SFHs I've read they own >70% of (lost my source unfortunately). They are going to start dying of en masse within the next decade. That…

Well their kids could live in them, or sell it and buy a different house to live in. Forecasting what the effect of that supply will be on prices seems hard to me. Housing units per capita is lower than it was 20 years ago[0] and I think if you could find a longer time series you would see the pattern continue back many decades. That timeseries also includes all housing, not just SFH. I think if you just looked at SF…

>Well their kids could live in them

Unlikely. There's a very high likelihood the house will have to be sold, either to pay off debts of the deceased (or bereaved), or because the children already have their own lives going, or because they don't want to assume the tax burden, or simply because each child wants their share to do with as they please.

>or sell it and buy a different house to live

This is what's going to happen. All of these property will be sold. A very small percentage will be assumed by the children because of the all issues mentioned above.

Re: The housing market is starting to crack – Sellers are cutting prices

#124

Post by nradov »

a_wild_dandan wrote: post #81
bobthepanda wrote: post #29

Earlier quoted context omitted.

the root cause is lack of supply, on an incredible scale. To put in perspective what a program to bring prices down would actually look like, Sweden launched a program in the '70s to build a million homes in ten years, when its population was 8 million. We have not seen homebuilding on that scale in the United States for decades, if ever.

This is the correct answer, full stop. Every other factor is peanuts in comparison. The sheer magnitude of our housing shortage is astonishing: Pre-pandemic, there was something like a ~5 million home deficit. Post-pandemic it grew to ~7 million. This deficit is likely even bigger today. It's simple supply & demand. We can't reduce demand -- people need shelter. The solution is providing supply. No amount of fiddling…

Within the USA we could reduce demand by reducing immigration. I don't think we should attempt to resolve the housing shortage that way, and I agree that we should build more housing, but let's at least be clear about the available options.

Re: The housing market is starting to crack – Sellers are cutting prices

#125

Post by exclusiv »

spaceflunky wrote: post #115
jeffreyrogers wrote: post #33

Unless the housing supply increases this will just be a temporary thing. As long as people are able to make their mortgage payments they typically won't sell their homes at a loss (even if their equity is negative). Some people will always be forced to sell due to life events and that's what will set current market comps. Since mortgage rates have recently spiked upwards people who need a mortgage to buy a home can a…

>Unless the housing supply increases this will just be a temporary thing. The housing supply will increase dramatically in the next decade, not by building but by attrition. More than 55% of all homes in America are owned by Silent Gens or Boomers[0]. That figure includes non-SFHs, of SFHs I've read they own >70% of (lost my source unfortunately). They are going to start dying of en masse within the next decade. That…

I'm a non-believer. Counter arguments:

1) Not 55% from your article. Youngest boomer is 59. That's about middle of the 55-64. So split the difference, it's 43.8%. Millenials are larger than boomers. Gen X is larger than Silent generation. If your thesis of them not being able to buy when they die off is correct, well, see #2 and #4 below.

2) People that inherit don't have to sell. Many will simply rent as it could be tax advantageous. Or they move in.

3) Construction costs (labor, materials) will inflate minimizing new supply.

4) The Fed has no choice but to bring rates back down and keep printing. National debt is $33T which is crazy but unfunded liabilities are 211T! We're well on our way to paying 1T in annual interest. 65% of spending is mandatory. Debt historically % of GDP is 46.9%. End of 2022 - 97%. [1]. Interest rates cannot remain historically elevated and the only way out of the debt load is to print print print. This helps assets and affordability (debt service) for investors and the genx, millenials to acquire. The US and world got drunk off a cheap dollar.

So I disagree on the macro of your thesis. Certainly some areas will be affected though with boomer/silent passings but that will be due to a demographic change in demand, gen x and younger not desiring those areas for numerous reasons.

I'll be holding assets as inflation continues, and probably rips again in the near future. It will be traditional inflation (actual economy) or inflation in the financial economy (stocks, assets). One or both have to rip from inflation. There's no way out of the debt load.

[1] https://www.cbo.gov/publication/58888

Re: The housing market is starting to crack – Sellers are cutting prices

#126

Post by rufus_foreman »

spaceflunky wrote: post #115
jeffreyrogers wrote: post #33

Unless the housing supply increases this will just be a temporary thing. As long as people are able to make their mortgage payments they typically won't sell their homes at a loss (even if their equity is negative). Some people will always be forced to sell due to life events and that's what will set current market comps. Since mortgage rates have recently spiked upwards people who need a mortgage to buy a home can a…

>Unless the housing supply increases this will just be a temporary thing. The housing supply will increase dramatically in the next decade, not by building but by attrition. More than 55% of all homes in America are owned by Silent Gens or Boomers[0]. That figure includes non-SFHs, of SFHs I've read they own >70% of (lost my source unfortunately). They are going to start dying of en masse within the next decade. That…

>> They are going to start dying of en masse within the next decade. That means A LOT of SFH are going to hit the market, all around the same time.

80% of the silent generation is already dead along with 33% of the baby boomers. Between them, around 8,000 people die every day, and that has been going on for quite a while.

When do you expect this to start having an effect on prices?

Re: The housing market is starting to crack – Sellers are cutting prices

#127

Post by fragmede »

nradov wrote: post #124
a_wild_dandan wrote: post #81

Earlier quoted context omitted.

This is the correct answer, full stop. Every other factor is peanuts in comparison. The sheer magnitude of our housing shortage is astonishing: Pre-pandemic, there was something like a ~5 million home deficit. Post-pandemic it grew to ~7 million. This deficit is likely even bigger today. It's simple supply & demand. We can't reduce demand -- people need shelter. The solution is providing supply. No amount of fiddling…

Within the USA we could reduce demand by reducing immigration. I don't think we should attempt to resolve the housing shortage that way, and I agree that we should build more housing, but let's at least be clear about the available options.

I think that enforcing internal borders, to prevent internal immigration, like people from Ohio trying to move to California or New York, or letting anyone in or out of Texas, is going to face a very strong uphill battle. But yes, let's be clear that is an option.

Re: The housing market is starting to crack – Sellers are cutting prices

#128

Post by bobthepanda »

fragmede wrote: post #127
nradov wrote: post #124

Earlier quoted context omitted.

Within the USA we could reduce demand by reducing immigration. I don't think we should attempt to resolve the housing shortage that way, and I agree that we should build more housing, but let's at least be clear about the available options.

I think that enforcing internal borders, to prevent internal immigration, like people from Ohio trying to move to California or New York, or letting anyone in or out of Texas, is going to face a very strong uphill battle. But yes, let's be clear that is an option.

The free movement of people is in the Constitution itself, not an amendment. That's how fundamental it is to the US.

Re: The housing market is starting to crack – Sellers are cutting prices

#129

Post by Izkata »

jfengel wrote: post #48
jeffreyrogers wrote: post #33

Unless the housing supply increases this will just be a temporary thing. As long as people are able to make their mortgage payments they typically won't sell their homes at a loss (even if their equity is negative). Some people will always be forced to sell due to life events and that's what will set current market comps. Since mortgage rates have recently spiked upwards people who need a mortgage to buy a home can a…

I'm afraid I don't follow that. House-sellers are generally also house-buyers. They move out of one place into another. It's neutral with respect to supply. If there's a glut of people owning houses but not living in them and not successfully renting them, then that does reduce supply, but they're also suffering opportunity cost. If they're willing to throw away money like that I don't think increasing supply would h…

Depends on life stage and other circumstances. They may be moving in with someone else, for example - anything from marriage to getting roommates to moving back in with the parents.

Re: The housing market is starting to crack – Sellers are cutting prices

#130

Post by jjav »

spaceflunky wrote: post #115
jeffreyrogers wrote: post #33

Unless the housing supply increases this will just be a temporary thing. As long as people are able to make their mortgage payments they typically won't sell their homes at a loss (even if their equity is negative). Some people will always be forced to sell due to life events and that's what will set current market comps. Since mortgage rates have recently spiked upwards people who need a mortgage to buy a home can a…

>Unless the housing supply increases this will just be a temporary thing. The housing supply will increase dramatically in the next decade, not by building but by attrition. More than 55% of all homes in America are owned by Silent Gens or Boomers[0]. That figure includes non-SFHs, of SFHs I've read they own >70% of (lost my source unfortunately). They are going to start dying of en masse within the next decade. That…

> The share of millenials and genzers who are financially fit to even purchase a home are going to be far less than the amount of people who are dying.

I don't understand this sentence.

The number of houses that get sold or transferred to living people is of course exactly the same as the number of houses vacated by people who died. It can't be anything else since houses don't evaporate when the owner dies.

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